RM2,500 starting pay makes little difference for graduates, say economists

A proposed RM2,500 starting salary for graduates in Malaysia will likely have little impact on their earnings, economists argue. Most companies already offer this wage to new hires, making the proposal insufficient to raise wages in the job market, according to experts. Geoffrey Williams of Williams Business Consultancy Sdn Bhd noted that graduates already earn between RM2,500 and RM3,500 per month, while Yeah Kim Leng of Sunway University deemed the proposed rate as a "reasonable legal floor" but still below a living wage in major cities.

Barjoyai Bardai of the Malaysia University of Science and Technology highlighted that the proposal is crucial as academic qualifications and skills do not always result in adequate pay. The proposal, announced in Budget 2027 by Prime Minister Anwar Ibrahim, aims to match pay scales to workers' qualifications rather than the general national minimum wage, which has increased from RM1,700 to RM2,000.

However, setting a minimum wage could lead to some graduates' employment contracts not being renewed, creating a "double-edged sword" for the policy. Yeah Kim Leng emphasized that the minimum wage should be determined through a tripartite negotiation involving the government, employers, and workers, rather than being solely based on market forces or government decree.

He also pointed out that market forces have suppressed graduate wages, with 65% earning less than RM3,000 per month, and inflation-adjusted median entry-level salaries for bachelor's degree holders have fallen by 10% over 25 years. While a RM2,500 minimum salary could improve purchasing power for young workers, Barjoyai Bardai cautioned against treating it as an "end in itself" and stressed the need for effective skills development, technological adoption, and strong demand for skilled labor to achieve a high-productivity, high-income economy.